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How to Reduce Perceptions of Risk for your Service Business


How to Reduce Perceptions of Risk for your Service Business

Before making a purchase decision, services have higher level of perceived risk than a good. Why? Because services generally have qualities that cannot be experienced before using.

There is Financial Risk (particularly with solicitors, lawyers, real estate, accountants, financial planners).

Physical Risk (getting a wisdom tooth removed, seeing a doctor, physio, chiropractor, massage therapist).

Social Risk (getting a bad haircut, for example, is visible and embarrassing).

Psychological Risk (seeing a psychologist, a life coach or counsellor, for example, could potentially damage our self esteem).

What Should a Service Brand Do?

Importance of a Strong Brand

If you are in a service business, a strong and well-known brand will reduce the perceived risk.

Consumers can have a positive opinion about a brand even if they have never experienced it. I know that American Express means “triumphant capitalism” and HSBC is a trustworthy bank. Have I ever used either? No.

Any sized business can create a strong and consistent brand. All activities should have a certain style, tone and feel. Consistency is key. Don’t mix typefaces and use multiple logos.


Research has shown that references from opinion leaders and word of mouth is more credible than a business’s own company communications.

It is especially important for some industries in which a negative attitude or legal constraint may be exist toward advertising (e.g. medical, dental).

If you have good testimonial, use it in your communications. It is more credible to have someone saying how great you are, rather than you saying it.

Ask for the Business

Tell your clients to recommend you. Remind them. Reward them.

“The only path to profitable growth may lie in a company’s ability to get its loya customers to become, in a way, its marketing department.” Reichheld, Harvard Business Review 2003 (Creator of the Net Promoter Score).

Enhance Clients’ Perceptions of Control

The more control your client feels they have, the more comfortable they will be. That doesn not mean that they have to have control, but they do have to perceive there is no uncertainties.


Communicate clearly and use plain terms. Make sure they understand you. Let them know what the process is from the outset. When you finish the first step, let them know what comes next.

If your website is going to be down or your office will be closed on a day it’s normaly open, FOREWARN people.

Post-Service Evaluation

Your client will not make their evaluation of your service until AFTER they have consumed it. There are a few important factors here.

First, cognitive dissonance. This is an experience of discomfort by the client as to whether they have made a good decision. They can be reassured through tangible clues and personal after-sales service.

You can do this by sending a thank you note or letter, more information about the service benefits, a Certificate or warranty, and ensure that the paper stocks are heavy, as these are all quality indicators. If somebody has invested in a Term Deposit, for example, don’t send them a black and white photocopy of a Term Investment Certificate on bond paper. Ensure it is quality, ribbed, colour branded and personally signed so as to convey trust and that the money is safe.

Universal Cultural Values

Although there are many regiona and national differences in the ways that services can be rendered and consumed, there are four principles that are universal.

1. Security

Every service customer must feel safe. Is your servicescape free of dangers

2. Respect

Do your staff feel valued and respected? If not, they may in turn cause your customers not to feel this way.

3. Esteem

The self-concept of the customer should be maintained and improved. People may use a health club to lose weight, but you don’t criticise them for being too fat. You encourage and support them to be healthier.

4. Fairness

It is absolutely critical within every culture that the recipient feel that they have been treated fairly and without discrimination.

If an accounting firm wants high net worth clients, make a prerequisite clear in communications. Don’t provide sloppy service because they are not of value.

On the Other Side

There may be higher perceived risks with Services, but there is also higher loyalty and more long-term relationships.

Do you have any examples of services who have exceeded your expectations?

Let you down drastically?



Danielle Spinks-Earl

Author & Manager, My Virtual Marketing Manager. MMktg | BACS